Public Bill Committee

[John Robertson in the Chair]

Schedule 1  - Power to abolish: bodies and offices

Amendment moved (this day): Government amendment 2, in schedule 1, page19, leave out lines 14 to 21.— (Mr Hurd.)

John Robertson: I remind the Committee that with this we are discussing the following:
Government amendments 5, 16 to 18 and 20.
Government new clause 1—Regional development agencies.
New clause 3—Impact assessment of removal of regional development agencies (RDAs)—
‘Before abolishing any regional development agency (RDA), the Secretary of State must produce and lay before both Houses of Parliament a report setting out the impact of the removal of RDAs on business development and economic growth in the region concerned and the preparedness of local economic partnerships (LEPs) to take over the functions of RDAs.’.
Government new schedule 1—‘Regional development agencies: consequential repeals.
Government amendment 22.

Nick Hurd: It is very nice to see you in the Chair again, Mr Robertson. I was stampeding towards the finishing line of my opening remarks in order to open up what I expect to be a spirited debate on this group of amendments. Unfortunately, I did not make it by the time the bell sounded, so I will pick up where I left off.
I was discussing new clause 3, tabled by Opposition Members, which requires, prior to the abolition of any regional development agency, the production and laying out of
“a report setting out the removal of RDAs on business development and economic growth in the region concerned and the preparedness of local economic partnerships (LEPs) to take over the functions of RDAs.”
We believe that those reports are unnecessary. As the Committee knows, an impact assessment is required in the Bill. As we are proposing to move the RDAs on to the face of the Bill, an impact assessment will be produced to cover RDA abolition, assuming that the Government amendments are accepted. It will set out the economic rationale for the abolition of the eight RDAs as a whole, excluding London, and will cover the costs and benefits of abolition.
The new model for economic development that we seek to put in place removes the regional tier and focuses efforts on functional economic areas via local enterprise partnerships. Currently, 98% of all businesses in England, as well as 98% of the population, are covered by LEPs. That is a real power shift away from central Government and quangos towards local communities and local businesses who really understand the barriers to growth in their areas.

Roberta Blackman-Woods: Will the Minister explain to the Committee the process by which the LEP areas are defined as functioning economic areas?

Nick Hurd: Quangos were set up on a regional level covering administrative areas that seemed very removed from the community level or constituency level that we represent. We are trying to encourage voluntary partnerships to form at a much more local level. It is right to try and focus the discussion on how to encourage economic growth and development at a much more local level than at the regional level. That is the whole reason underlying the new model—the power shift that I am talking about, away from central Government and quangos and towards local communities and local business, because we think that they really understand the barriers to growth in their areas. We are also working to try and ease the transition from over-reliance on the public sector through the regional growth fund. The regional growth fund is a £1.4 billion challenge fund—

Jonathan Ashworth: Before we adjourned, the Minister said that he anticipated some degree of opposition to this particular proposal from Opposition Members. Did he also anticipate opposition from the former Deputy Prime Minister, the noble Lord Heseltine? He said that scrapping RDAs was a mistake, that they acted as a bridge between localities and Whitehall and that Departments, such as the Department for Communities and Local Government, were building vast empires in the regions. What assessment has the Minister made of those remarks?

Nick Hurd: I have the greatest possible respect for Lord Heseltine, and he is entirely entitled to his view. I have no idea when that was expressed, because I do not know the quote. I know that he is actively involved in the delivery of the regional growth fund, and I am delighted about that. It is a £1.4 billion challenge fund, which aims to stimulate enterprise by providing support for projects and programmes with significant potential for creating long-term private sector led economic growth and employment.
I would like to make one thing clear. LEPs are part of the post-RDA landscape, but they are not the whole picture. LEPs may, if they wish, choose to undertake similar activity to those previously carried out by RDAs. Other continuing RDA activities are moving to be co-ordinated at national level, but they will often be delivered at a local level, bringing in local partners and city regions. A good example is foreign direct investment, which is still delivered locally on the ground but co-ordinated nationally by UK Trade & Investment, which will build links with LEPs, local authorities, business organisations and city regions as they promote and attract inward investment. Those continuing activities were set out in the local growth White Paper, which was published in October 2010.

Valerie Vaz: This is fascinating. I appreciate that it is after lunch, but are the Government not just reinventing the wheel, because that is what the RDAs were doing anyway?

Nick Hurd: LEPs are not a straight replacement for RDAs. As I have said, they are free to assume some of their functions, but the hon. Lady has missed the fundamental point. RDAs cost a fortune. The previous Labour Government reduced their funding, not least because a strong body of opinion suggested that they simply did not add enough value for the £2 billion that was being spent on them. We propose a model of economic development that is much more local to communities, allowing partners to come together and tackle the barriers that they see locally. Speaking through the prism of my experience in my constituency, the RDA felt a long way away, and the value it added to our community seemed extremely limited. This is a different model, which certainly does not replicate RDAs.

Lisa Nandy: I was interested in the Minister’s remarks about RDAs not generating the right returns. An independent evaluation by PricewaterhouseCoopers showed that for every £1 spent, £4.50 was generated in economic output. Is that not a significant economic return?

Nick Hurd: I simply refer the hon. Lady to the fact that the previous Labour Government, although she was not part of it at the time, significantly reduced the budget to RDAs by about £300 million in the last financial year. Clearly, some people at the Treasury were not entirely persuaded that the investment in RDAs was producing as big a dividend as possible.
LEPs are not statutory bodies. It is up to each individual LEP to decide what its priorities are for economic growth in its area. Under existing plans, LEPs will not deliver statutory functions on behalf of the Government, so there is no need to assess the readiness or otherwise of the LEPs to take over RDA functions.
In summary, it is clear that the inherited structures are not the most appropriate way to achieve economic growth. The RDAs were expensive bodies to run, often duplicating activities that could have been better undertaken at a local or national level.

Jonathan Ashworth: I have met representatives of the Leicestershire chamber of commerce to discuss the LEP, and as a local Leicester MP, I will do all I can to support it. I hope it succeeds, because we should use every tool at our disposal to support growth and jobs in Leicester’s economy. However, a genuine concern—or perhaps, complaint—of the business community in Leicestershire is that LEPs do not have any resources. The city council may be expected to put resources in, but their budget is being drastically cut. Does the Minister not accept that LEPs, if they are to succeed, need resources?

Nick Hurd: The relevant Department has listened to that argument and set up, as I understand it, a £5.5 million start-up fund to help LEPs get going. In my experience, the success of this type of local partnership does not depend on a continued torrent of public money flowing through them.
I return to my central point that RDAs cost £2 billion a year. The previous Administration recognised that and were in the process of slashing their budgets. They were expensive, often duplicating activities that could be better undertaken at a local or national level, and in the current fiscal environment, tough as it is, the budgets were simply unsustainable.

Charlie Elphicke: It was a question not only of the size of the budget, but of how it was spent. In my constituency, the South East England Development Agency would buy up sites left, right and centre, but do nothing with them. In one case, they spent £18 million on creating a business park that was left completely empty. It is possible to have efficiency of spending.

Nick Hurd: I thank my hon. Friend for that intervention, which was borne through direct experience of dealings in such matters. There is a strong feeling around the system that a lot of money was wasted in the activities of RDAs. That party is over.

Richard Harrington: I felt that I should make this intervention, because I have experience of the RDA in my previous life in business, and now I am on the board of the local LEP. I do not think that touches your constituency, because it is Hertfordshire and just on the border. I apologise; I was not referring to your constituency, Mr Robertson. We would welcome your constituency in Hertfordshire LEP. I will get to the point, which is what you would like.
The RDAs were well-intentioned vehicles, but they had the best offices in the area and expensive staff. Trying to be objective, and not political, although other Members may have had different experiences, I saw very poor value and very little achieved. I want to clarify something that the hon. Member for Leicester South said about LEPs not having resources. In the one that I am on the board of, resources have been available for some set-up costs and some administration. We are optimistic about the future.

John Robertson: I know the boundary changes are going to make my constituency bigger, but I did not think it would be that big.

Nick Hurd: The Boundary Commission moves in mysterious ways, Mr Robertson, but to link Watford to your constituency would be a stretch of the imagination.
I am grateful to my hon. Friend and current neighbour for that intervention because it is borne out of direct experience, which I do not have. I am sure that he is right to reinforce the point made by my hon. Friend the Member for Dover, which was that the RDAs were set up at a time when a great of public money was swishing around the system. In that process, there was a great deal of laziness with public money and a lot of it was wasted. That era is definitely over, and I am grateful for his comments on LEPs. They are local voluntary partnerships. On resources, I re-emphasise that the £1.4 billion regional growth fund is a significant resource to stimulate programmes and projects that have the capacity to stimulate economic development, so it is not a question of no resources being available.

David Wright: The Minister has been generous in giving way in this Committee, which we appreciate. Government new clause 1 is included in this group of amendments and the hon. Member for Dover has mentioned property and land assets that were owned by RDAs. Will the Minister tell us a little more about how he sees those assets being disposed of or passed on to, as the new clause suggests, “eligible persons”? We have had quite a bit of discussion about that already in Committee. Will he give us more detail about how that might work? There has to be equity in relation to how those resources are allocated within regions. They had been acquired on a regional basis—I am trying to be helpful to him here, by the way—so how will they be reallocated around the regions fairly?

Nick Hurd: I am sure the hon. Gentleman is aware that many RDAs have developed detailed plans for the disposal of their assets and liabilities. Parliament has been informed about the proposals that have already been agreed. Local authorities and LEPs can buy RDA land and property deemed suitable for sale on the open market, which involves those assets that have been fully developed. Some local authorities have already acquired former RDA assets in this way. The Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), announced in July that RDA land and property assets that are in need of further development would be transferred to the Home and Communities Agency under a stewardship arrangement. That will allow local partners, including local authorities and LEPs, to influence the development of these assets.
I will draw my remarks to a close in order to let the debate open up. We think that RDAs were expensive to run and often duplicated activities that could be better undertaken at a national level. Various reports have shown that some of the work that they did in business support was successful and delivered a good return, as the hon. Member for Wigan has suggested, but the regeneration activities were considered to have delivered poor value for money. The fund that I have mentioned will ensure a better return for every pound invested. The budgets were unsustainable in the current fiscal environment and the new model of economic growth will be more nimble and cost-effective, targeting inevitably more limited resources where they are most needed. In light of those remarks, I hope that Opposition Members will feel able not to press proposed new clause 3.

Roberta Blackman-Woods: It is a pleasure to see you back in the Chair this afternoon, Mr Robertson. It should be obvious to Committee members that the new clause seeks to tease out, in opposition to the Government amendments, some of the problems with the process of abolishing RDAs. We want to put some common sense into how—in an ideal world—we would go about abolishing bodies of this nature, if we wanted to do so, in a sensible way rather than in the way we have experienced it to date.
Some of us were really quite shocked to obtain from the Department for Communities and Local Government, some months after the Government announced the abolition of RDAs, a schedule transferring the functions of RDAs over a period of time without any legislative mandate in place. In passing, I also query whether the governing parties have a mandate to abolish all RDAs. Although it was clearly an aspect of Conservative policy in advance of the 2010 election, it was not at all clear that the Liberal Democrats would take that action. I have some concerns about that as well, but on the matter before us today, I want to make some points about how the whole process should be managed and about some of the grave problems emerging in some areas due to how the Government have gone about abolishing RDAs.
The problem depends on where you are coming from. For example, my constituency is in the north-east. It is widely acknowledged across the business and other sectors that One North East was an excellent RDA that levered in many thousands of jobs as well as additional funding. There are now real problems for the region with lack of growth that partly relate to the running down of the RDA. It was done so quickly and in such a cack-handed way that lots of problems are emerging.

Nick Hurd: Does the hon. Lady acknowledge that the previous Government gave RDAs the task of narrowing the gap in growth rates between the relatively prosperous south-east and the rest of England? It provided them with significant resources to do so and that was the target they failed to meet.

Roberta Blackman-Woods: What is interesting about that intervention is that it ignores the real work done in some regions to help catch up with other areas of the country. Figures from 2007-08 show that the north-east had the highest number of business start-ups of any region. Then we were all hit by the global recession, which meant that when the Government looked at the concrete figures in 2010, the figures had not narrowed by as much as we would have wished. It is important to acknowledge the very good work that RDAs did in a number of areas. If the Government had had proper consultation processes before deciding to abolish RDAs, I think they would have ended up wanting to keep RDAs in some areas but not in others.

Lisa Nandy: Does my hon. Friend agree that the Minister’s point is distorted by the fact that it includes London and the south-east, which have very particular circumstances? If we take London and the south-east out of the picture, there has been a remarkable convergence between the different regions. Also, does she agree that the Minister’s analysis entirely misses the point that the RDAs were about trying to ensure that we created jobs and prosperity in regions that, for far too long under the previous Conservative Government, had seen absolutely none of either?

Roberta Blackman-Woods: My hon. Friend makes a number of excellent points in support of the RDAs and the regional economic strategy that was put in place by the Labour Government. It is also interesting to note that during the debate in the other place, a number of Lords from different parties said that the abolition of the RDAs was both “chaotic” and “misguided”. That is one of the points that we are making this afternoon. My hon. Friend the Member for Wigan referred to the very low rate of growth and the slowdown in economic growth in some of the most disadvantaged regions. Given that low rate of growth, I am absolutely sure that this policy will be seen in hindsight as foolhardy and very short-sighted indeed.
New clause 3 seeks to delay the process of abolition. Labour members of the Committee recognise that a number of the RDAs are already barely functioning because their funding has been withdrawn and they are being wound down in advance of this Bill. There is another point about RDAs that was touched on this morning. I know from my own experience in the north-east that, as soon as it was announced that the RDA was going to be abolished, some of the best people in the RDA, who had brought industry into the region, left for other jobs, most notably in London. Perhaps we should put the question back to the Minister—if he thinks that the RDAs were not very good at narrowing the gap between regions, what is in place in the current arrangements to ensure that there is a narrowing of the gap?
New clause 3 proposes that before the RDAs are abolished the Government should undertake a thorough evaluation of their work; that the Government should adequately check the preparedness of local enterprise partnerships to undertake the functions of the RDAs that are being allocated to them; and that the check should be made in advance of abolition.
It is clearly outrageous that regions should not have growth plans in place and that the RDAs are being abolished at the very time that we need growth plans for the regions, particularly the most disadvantaged regions. It seems particularly odd timing to abolish the RDAs now and I am not sure that we have heard from the parties opposite why there is a rush to abolish them.
As I have said already, since their inception the RDAs have created thousands of jobs. Interestingly, in that respect they were well ahead of the targets that were set for them by the governing Department. We know from the PricewaterhouseCoopers study that for every £1 they spent RDAs levered in £4.50 on average, but that was an average figure. Interestingly, it was better for the most disadvantaged regions, and in my own region, for every £1 the RDA spent, £9 was brought into the region. By anybody’s estimate, that is a really positive performance and I would be interested to see whether LEPs, as they roll out, are able to achieve anything like the degree of leverage that at least some of the RDAs were able to achieve.
Crucially, the RDAs did more than just bringing jobs to particular areas or levering in money from businesses, because they were able to produce a coherent economic vision for their region and to assess the local infrastructure needs on a regional basis. That is particularly pertinent, because if we are to have economic growth, it will require proper transport links. I will again use my region as an example. The RDA was able to assess that there was a problem with the Tyne tunnel, which was slowing up business development because of the big tailbacks that business had to put up with. Money was therefore found from a range of public and private sector partners to expand the Tyne tunnel. Similarly, plans were in place for widening the A1. It is just not clear to me how a big infrastructure project like that, which may extend over a couple of local authority areas, can be addressed under the current arrangements.
The RDA was also a strong voice for business, and it brought together people from the public and private sectors. It also—there is no mention of this in what is going to happen with LEPs—brought together people who were looking at the skills needs of the region and ways of addressing that. It brought a whole range of education providers together—schools, colleges and universities—to upskill the local population, particularly in areas that had had a skills deficit for some time, such as the north-east and north-west.
The list could go on, but I hope that I am making the point that the process that the Government have adopted for abolishing the RDAs just does not enable the complexity of issues to be taken on board.

Jonathan Ashworth: Although I represent a city seat, some of my colleagues will know that, before I came here, I had an interest in coalfield regeneration, particularly the Nottinghamshire coalfield. I know of many examples, from both the Nottinghamshire coalfield and what was the Leicestershire coalfield, where the RDA played an absolutely vital role in regenerating some former brownfield sites. I suspect that there are similar examples from the Durham coalfield that my hon. Friend will know about. Does she share my concern that, notwithstanding the transfer of coalfield assets to the Homes and Communities Agency, some of that regeneration will inevitably fall back as a result of the abolition of the RDAs?

Roberta Blackman-Woods: My hon. Friend makes an excellent point, and I hope that we can spend a little Committee time on looking at the transfer of assets, because it looks a bit peculiar. I will say something about this in a minute or two, but the Minister told us this afternoon that local authorities would be able to purchase the assets of RDAs on the open market. The local authority in the area that I represent would certainly not be able to do that, because it is receiving a huge cut—£67 million—from the Government this year, so it would simply not have the finance to be able to purchase any of the assets. The assets are indeed being transferred to the HCA, and it is not clear whether they will then be used for business development or some other function.
It is fair to ask whether the new arrangements are able to cope adequately with the variety of functions that were undertaken by RDAs. We need to hear a rationale from the Government of why those functions are being split between several organisations. On Thursday, my hon. Friend the Member for Hemsworth was discussing how the Government have a new zeal for nationalisation. Here, we see a zeal for centralising that is truly outstanding. It takes my breath away.
We know that several functions of the RDA have been transferred to Whitehall and to UK Trade and Investment, so how will we ensure some democratic accountability in where investment ends up? We also know that the record of UKTI is good, but it is not a good record for all regions. It concentrates its activities in London and the south-east.
We know that the growth fund is inadequate and is only about a third of the funding that was available to RDAs. There are several problems with the operation of the growth fund, about which I will say more in a moment or two. We also know that LEPs vary enormously from area to area and that the process of setting them up was completely shambolic. The deadline for the initial round of LEP applications came six weeks before the publication of the White Paper that outlines their form and function.
I am not at all clear on what basis the first round of LEPs were actually agreed. That has led to the problem that regions such as mine have ended up with two LEPs and not one, which might have been desirable. That almost entirely relates to the process of establishing LEPs in the first place. It is very unlikely that those two LEPs will always work together in the interests of the region. I am sure that they will work together where they can, but the system that has been put in place for bidding for regional growth fund money means that those two LEPs will often be in competition and not working together to get resources. That does not seem to be a very sensible way of processing economic development. I have used the example of the north-east, but I am sure that my hon. Friends and Government Members will have similar stories from their areas.
The criticism of the process does not simply come from the Opposition. There has also been a hugely negative appraisal from business, which has highlighted the confusion over the role of LEPs. Businesses have said that LEPs are hampering business growth and undermining the Government’s rhetoric about a private sector-led economic recovery. Local business groups have very vocally and publicly expressed their concerns. They also say—this is quite interesting—that there is still a stand-off between the Government saying, “Get on with it” and LEPs saying, “Get on with what?” That alludes to the fact that massive budget cuts have resulted in huge job losses and redundancies in some of our most affected areas. Therefore, the money is not available to LEPs. I acknowledge to the Minister that there is a very small start-up grant of some £5 million to cover all of the LEPs in the country. However, that is a small amount of money and is just the start-up costs.
The point that the LEPs in the business sector are making is that there is not the money or substantial enough resources behind the LEPs to enable them to take on board some of the key functions of the RDAs in terms of attracting and supporting business at a very early stage of its development or supporting business through periods of economic difficulty. We know that that very important function was undertaken by RDAs. I shall give two examples from my area. During the economic downturn, Nissan needed some support from the RDA to bring forward its new generation of cars. That was given by the RDAs through a proper process, and Nissan now continues to expand in the north-east. Given that Nissan is a big regional employer, it is not clear to me how the LEPs would have the ability to support a local business in that way.
In terms of business start-ups, I have the Printable Electronics Technology Centre, which deals with plastic electronics, at the North East technology park just outside my constituency. That involves new technology and is a bit risky, but it needs sustained investment to be able to compete with similar processes in Japan. Again, that involved money that was forthcoming from the RDA. It may be that the Minister will say that that is what the regional growth fund will do, but we know that the regional growth fund is seriously underfunded. In any case, there is no regional strategic input into regional growth funds, but PETEC could be important to the future of manufacturing in this country. However, the regional growth fund does not take that into account in making its assessment. That is the issue at the heart of new clause 3. We are saying in the new clause that it was not sensible of the Government to remove some functions from the RDAs before LEPs had the capacity to do such work.

Charlie Elphicke: I mentioned earlier that our problem with the South East England Development Agency was that it would build things but not create jobs or money. The experience in east Kent with the new LEP—its dynamic leadership has much more local government involvement—is that its bid for the east Kent enterprise zone on the Pfizer site has been successful. The same LEP also promoted the Harlow enterprise zone. There is a sense of movement to create more jobs and money. Should it not be the focus of partnerships to create jobs and money rather than just talk about it?

Roberta Blackman-Woods: It is interesting that all the negative points about RDAs seem to come mostly from people in the SEEDA area. I think that that is because the economy in the south-east had a vibrancy that other areas did not. In areas such as the west midlands, the north-west and the north-east, RDAs had an important role that perhaps they did not have elsewhere.
Why build such complexity into the system? UKTI now undertakes some economic growth functions; so do DCLG, BIS and BIS Local, whatever that is. I thought that it was a branch of Tesco, but apparently not. The wheel is being reinvented in a very complex way. In addition, we now have the regional growth fund and enterprise zones. How anybody in business knows where to go for assistance, I do not know.

David Wright: Would my hon. Friend be interested to know that the Telford area is part of the Marches LEP? I hope that it will be extremely successful, but the other day, when I raised with council officers in my local authority area the importance of the industrial supply chain down the M54 into the black country and the west midlands conurbation, they said to me that they could not address that through the existing LEP, but that we could join another one. It would appear that discussion is going on about local authority areas being able to join several LEPs. That might be the route that we go down, but it is confusing. Advantage West Midlands provided a far simpler structure and invested significantly in Telford over the years.

Roberta Blackman-Woods: My hon. Friend makes the point well.

Stephen Mosley: There is a solution to the problem just highlighted: the LEPs can work together. I represent a constituency on the edge of the north-west. My problem is that our economic sub-region extends across the north Wales border, and there was no interaction between the Northwest Development Agency and the Welsh Assembly. It was almost as though a wall ran down the middle of the economic sub-region. At least LEPs are locally driven and decided, and local people on the ground can make a decision to interact with neighbouring LEPs and do something for the sub-region. It is better than working on a regional basis when some areas of a region are very different from other areas.

Roberta Blackman-Woods: Many RDAs work together successfully. In the Northern Way, for example, three northern authorities worked well together. There was nothing structurally to prevent RDAs from working together or working across borders. Interestingly, the north-east is being advised to get the two LEPs working together in order to put the needs of the region forward. My question to Ministers is: why do that, when we had an effective body that adequately represented the interests of the region in the form of the RDA?

Susan Elan Jones: Would my hon. Friend agree that there is absolutely nothing in the existing structure of the RDAs to prevent cross-region and cross-border working? One only has to consider the north Wales and west Cheshire regional plan, which was not always popular with everyone but was an attempt to look at issues on both sides of the border. Cross-border working can take place on all sorts of things; there is nothing to prevent bodies from working in such a way on a range of issues.

Roberta Blackman-Woods: My hon. Friend makes a powerful case in favour of how the RDAs might have worked. New clause 3 also encapsulates our great concern that some of the functions of the RDAs are not being adequately considered by other bodies. We still have concerns about European funding, and we need some assurances from the Minister that European funding will not be put at risk. We also have some concerns about asset transfer. I note that Government new clause 1 states in subsection (9):
“The Secretary of State may make a scheme for the transfer of property, rights and liabilities of a regional development agency to an eligible person or any body corporate”,
and we have heard what that is likely to mean. The point about transferring a number of the assets to the HCA is that that does not seem to be backed by any demand that the land be used for economic development. In my constituency, One North East held a number of sites that are strategically important for the region, adjacent to the riverbanks. Those sites are in the process of being transferred to the HCA but no one, including the LEP, knows what that land will be used for. It might be used, straightforwardly, for accommodation, and although that might help us with some of our accommodation needs, it will not necessarily be in the best interests of economic development in either the city or the region. We would like to hear something from the Minister about how the transfer of assets will be looked at carefully, and whether those assets will be used for economic development.
We recognise that in the current financial climate it will not be possible to re-establish the RDAs, given the manner in which they have been run down, but we believe that the Government should be giving more support to the new LEPs to help them drive economic growth.

Charlie Elphicke: Touching on the point the hon. Lady has made about the Homes and Communities Agency, is it her case that it is a distant quango, unaccountable to local communities and possibly in need of reform?

Roberta Blackman-Woods: The hon. Gentleman has made his own case about the HCA very well indeed, and I am sure the Minister has listened carefully to what he had to say. We are concerned about the LEPs not being given adequate resources to undertake activities in their area to promote economic development, and we know that the growth fund is no substitute. In addition, the LEP strategy seems to lack coherence, and the LEPs seem to lack the ability to work together regionally to set priorities. We have concerns about that as well. I am also concerned that they do not seem to be looking at what skills are needed within a particular area, and, as I said earlier, that will go beyond the geographical area of some of the current LEPs. They need to do more to bring people together and to involve small and medium-sized enterprises. One criticism I regularly hear is that although SMEs did not always like RDAs, the new structures are not working any better, which is clearly an issue that the Government need to address.
We really want the Government to look again at this whole issue, particularly at the way in which the RDAs are being abolished. There needs to be a proper evaluation to set some goals for the LEPs, so that they are clear about the sorts of activities they should be undertaking. We look forward to hearing what the Minister has to say.

Valerie Vaz: It is a pleasure to serve under your chairmanship, Mr Robertson. This is the first time that I have been in your presence, so I thought that I would get that out of the way.
You were not here this morning, Mr Robertson, but this is the second time today that I will be quoting the Prime Minister. I do not know what has come over me—perhaps it is something in the water. The RDA in the west midlands is Advantage West Midlands, which is appropriate as it has been an advantage to the area. As early as 15 February of this year, the Prime Minister actually praised Advantage West Midlands for bringing wealth and jobs to the area. He even made a video recording to say how wonderful it was; and it was.
Anyone who has been to my constituency—I hope it will still be my constituency in a few months’ time—will know of the Walsall Waterfront. It got as far as phase one and was then abolished, so phase two and phase three were cancelled, which is extremely worrying. The employment scheme, which was designed to bring jobs to the area, was fantastic. It brought together housing and jobs, which was vital, but all that has gone.
Another benefit Advantage West Midlands brought to the area was the Manufacturing Advisory Service. Between 2002 and 2009, it helped 5,000 manufacturing companies in the area and improved manufacturing efficiency. Chamberlin & Hill is one of the firms that has been helped by the Manufacturing Advisory Service, and I have nominated it to the associate parliamentary manufacturing group, Made By Britain. The company makes this fantastic structure that is used for turbocharged engines. It has brought back the manufacture of these little structures from India and China and it is making them in Britain. Amazingly, the company will now have a turnover of £5 million. These structures will enable us to meet the European directive on reducing our emissions by 60%. They will go into each engine. Members may not know this, but Porsches have turbochargers. Every car will have them and they will reduce emissions. The Volkswagen Golf has them at present. The Manufacturing Advisory Service helped the company to take away the manufacturing line and build a learning centre, so that workers got lots of qualifications. That is what Advantage West Midlands did for the company. It was efficient, too. Contrary to what the Minister has said, for every pound that was invested, £8.14 was generated in the local economy. That is a huge amount. It was efficient in other ways, because administrative costs, which I know Members are exercised about, only amounted to 7% of the total budget. That was amazing.
The organisation is closing on Monday, and many good people are leaving. It is not recognised that some people carry on in their posts, even though they know the organisation is to be abolished. That is public service, Mr Robertson—to me, that is someone who carries on with their job, despite the chaos all around them. That is what those public servants have done. As I have already mentioned, the Prime Minister said it was one of the top-performing RDAs. That worries me, because it reminds me of when former Prime Minister John Major would say that he had every confidence in a Minister—and then the next day the Minister would resign. The Prime Minister says that this is a wonderful organisation, as he has done with the NHS and is doing with the RDAs—and then the next day it has gone. I am concerned about what might happen if he starts praising us.
Some £975 million was given to Advantage West Midlands, but only five projects have so far received money. That is worrying. A constituent told me that, under the current chaotic arrangement, money promised to him and agreed by the RDA had been stopped. He was told by the body administering the funds the he has to show growth. How could the company grow unless he was given the money to make it grow? That is the sort of difficulty going on now.

David Wright: Does my hon. Friend accept that Advantage West Midlands was not only engaged in promoting manufacturing but had a wider role in the region? That is what was important about regional development agencies: they had a strategic overview. In an area such as Telford, the agency was not only supporting manufacturing but investing heavily in tourism. It provided significant funds to the Ironbridge Gorge Museum Trust for redeveloping one of its major sites, which brings hundreds of thousands of tourists to the west midlands every year. It also supported estate-based regeneration projects, building centres to promote skills and development in learning in parts of my constituency and, I am sure, right across the region. RDAs had a wider strategic overview; it was not just manufacturing, even though that is incredibly important in the west midlands. The RDAs had an overview that was strategic and important in a number of sectors.

Valerie Vaz: I thank my hon. Friend; he is absolutely right. That is what the learning centre at Chamberlin & Hill did. The other main point about RDAs, which I would like the Minister to address, is how European funds are to be accessed. Clearly, the RDA had a link and role in that; how is that going to happen on a regional basis? It is important to show that. It is nice to see that there is movement and growth in the west midlands. However, I feel that that is all going now, given the uncertainty. I would like to pay tribute to the people at Advantage West Midlands, one of the top-performing RDAs. Will the Minister address his remarks to that?

Lisa Nandy: I am troubled by being on the same side of the argument as Michael Heseltine. As far as I am aware, that has never happened to me before. I suppose in the spirit of coalition politics, I ought to accept it. However, I absolutely agree with the remark he made in The Times, referred to earlier by my hon. Friend the Member for Leicester South: that the abolition of the RDAs and the announcement of just over a year ago was a real mistake and will have serious consequences for the people I and my hon. Friends represent. The uncertainty that surrounded the announcement caused absolute chaos. I was contacted by my own north-west development agency, which was completely confused by the statements coming out of Government. There were statements about the future of RDAs from the Secretaries of State for Communities and Local Government and for Business, Innovation and Skills that appeared entirely at odds with one another.
I made the point earlier to Ministers but I make it again: when there is considerable uncertainty, the problem is that people start to leave and projects start to fail. That has been happening for some time in the agency with which I work most closely. The loss of such expertise is serious because regenerating areas such as Wigan, a former coalfield community, is incredibly difficult. It takes many years and a lot of patience and skill. There were people in the Northwest Development Agency who had that, but they have now been lost. Whatever decision Ministers make—and I seriously hope they will think again—that experience has now been lost and cannot be recovered. The decision to announce the end of the RDAs had immediate financial and economic consequences. Much of the progress that had been made over several years was lost, and the competitive edge that areas such as mine had started to gain was undermined.
The Conservative mayor of north Tyneside recently highlighted the fact that 900 jobs that Amazon was going to locate in his constituency have been lost to Edinburgh because of precisely the sort of help that the RDAs used to provide: such help is now being provided by the Scottish Parliament. Unfortunately, north Tyneside, an area that badly needs a boost, is simply unable to compete because of the loss of the work of the RDA.
More importantly, the Northwest Development Agency was working—there was no reason to get rid of it—because it had a clear and essential purpose, which was set out when it was established: to promote economic development and regeneration; to promote business efficiency, investment and competitiveness; to promote employment; to enhance skills relevant to employment; and to contribute to sustainable development. Surely no member of the Committee believes that those are not the right objectives for the future, particularly for areas such as mine that so badly need it.
The NWDA delivered on jobs, investment and help for business. Looking across all the RDAs, 500,000 jobs were created, £1.7 billion of additional investment was levered in from the private sector and nearly 57,000 new businesses were created in just four years. In the north-west alone, in 10 years 85,000 jobs were either created or safeguarded and more than 900 investment projects were realised.
For former coalfield communities such as mine, such investment could not be more important. As was pointed out earlier, the regional aspect is important, and the LEPs simply will not replace it. When the mining industry collapsed, areas such as Wigan saw the end not only of jobs, but of a way of life. The loss of confidence that that creates, and the devastating ripple effect across all cultural, social and economic life, is enormous. If I had one criticism of the previous Government, it is that they did not understand quickly enough how long it would take to rebuild areas such as mine that had suffered such devastation.
The Northwest Development Agency did a fantastic job because it worked with the Coalfields Regeneration Trust. Between them they had the expertise to deal with an area that had suffered such an unprecedented collapse.

Roberta Blackman-Woods: My hon. Friend’s speech is powerful, and she is making an interesting point on developing confidence. The effectiveness of the way in which RDAs operated has gone somewhat unnoticed. However, we in the north-east had a conference in 2008 on whether the north-east is becoming more confident. Hundreds of people attended, and they all accepted that the RDA was critical in improving confidence not only in business, but in people, their culture and their ability to get on and build up new businesses. That has been lost.

Lisa Nandy: I absolutely agree with my hon. Friend. The picture she paints could equally portray my constituency. One of the problems with the proposal is that it relies on the assumption, to which the Minister alluded earlier, that if public sector intervention and support is removed, the private sector will somehow spring up to fill in the gaps. In my constituency, there has not been a large private sector because of the dominance of the mining industry. As the Government have pursued this strategy of withdrawing support, as well as making huge and fast cuts to public services, unemployment has risen, so those people are having to claim benefits and are not spending in local businesses. Local private companies are not able to get the contracts that they used to get from public services. Everyone is suffering. It is a vicious cycle, in which businesses are going under, people are losing jobs and people are losing their homes. There is no growth and they cannot see a way out. That is important, because with the regional development agency, that investment was not only provided by the state, but levered in through the private sector.
There were so many success stories with the Northwest Regional Development Agency and I have a book here that sets out a number of them. If Members on the Government Benches want to read it at some point, I would be happy to lend it to them. The best known success story of the Northwest Regional Development Agency is MediaCity, the move by the BBC of several of its functions and their staff up to Salford. That has been a terrific boost to the whole area. It has not just been a boost to my constituents as far away as Wigan, but has had ripple effects all the way around the region. The Northwest Regional Development Agency covers an enormous area; it goes all the way up to Cumbria.

Stephen Mosley: No one is denying that some of the regional development agencies have done some fantastic things, but any organisations that are given £15 billion over 10 years are going to do some brilliant things. The question we have to tackle is whether that was the best way to spend that money and whether there is a better way of doing it. That is what the Bill is hoping to achieve with LEPs and so on. There have been some fantastic success stories, but could it have been even better?

Lisa Nandy: I thank the hon. Gentleman for that, because it has given me the opportunity to read him a quote from Peter Salmon, the director of BBC North. He said:
“The NWDA’s support, knowledge and expertise were an important factor in the BBC’s decision to locate in the Northwest at MediaCityUK. The Agency continues to play a vital strategic role in the successful development of the public-private partnership at MediaCityUK.”
That underlines my point that it was the NWDA’s expert knowledge and understanding of the area in which it operated that was so valuable. To answer the hon. Gentleman’s question, people cannot expect to pump money in and get results. That expertise is needed as well.

Richard Harrington: I do feel that the hon. Lady’s point on how good the RDA is in her area is not helped by giving us an example that is one set of taxpayers paying for an organisation funded by another set of taxpayers to move up north. I would be much more interested in arguments from business and private investment as an example of the RDA working well.

Lisa Nandy: I have already given examples of the amount of private investment that was levered in by the Northwest Regional Development Agency and by RDAs around the country, which I do not know so well.

Roberta Blackman-Woods: Does my hon. Friend agree that Government Members are missing the important strategic and comprehensive role that RDAs had in promoting regeneration? It was not just about economic regeneration with jobs; it was also about the physical regeneration of areas that very much needed improvement. That does not seem to be considered by any agency or Department at the moment.

Lisa Nandy: I concur with that. Part of the analysis of this has focused just on the jobs that were created and the amount of economic return, but it ignores the fact that, in constituencies like mine and the hon. Lady’s, there was a job to do in creating infrastructure before jobs could be created.

Charlie Elphicke: I was interested in the hon. Lady’s comments on the reasoning of the BBC moving to Manchester. She said that it was due to the RDA, but my recollection was that the former Prime Minister was enthusiastic to prove that not everything in his Government was London-centric and that he wanted to show that some organisations could be moved to the north. So a whole lot of BBC people seem to have been compulsorily moved to Manchester. Have I misunderstood the history of the events that led up to that?

Lisa Nandy: First, it was not me who said that; it was the BBC. Secondly, the thought of this terrible fate that awaits these poor people who have to move up north to Manchester—that is exactly what I would expect from the hon. Gentleman. [Hon. Members: “Touché.”]
Many Government Members, including the Minister, have dwelt on the issue of efficiency. A 2009 report, “Putting the Frontline First: smarter government” found RDAs to be among the 25% most efficient of all Government Departments. I have not looked at where the Cabinet Office came in that, but the Minister might want to check and perhaps consider that it is rather odd to get rid of, on the basis that it was inefficient, one of the agencies ranked as most efficient. A National Audit Office report in 2006 bore that out.
I have already said that for every £1 spent, on average £4.50 was generated in economic output. But in my area in the north-west, the figure was £5.20. Unfortunately, that is not as much as in the area of my hon. Friend the Member for Walsall South, but it is still a stunning return on taxpayers’ money. The Minister said he thought that the LEPs could do better. If they are going to press ahead with this—I suspect they will because it is already happening—will he commit to conducting the same evaluation after the LEPs have been established so that we can see whether they do better?
Finally, I would like to say something about how this happened and why I believe it to be a mistake. It was announced a month before the NAO published its evaluation into the RDAs, so Ministers had no time to consider the evidence. The Newcastle Journal put in a Freedom of Information Act request and discovered that this decision was taken after just one meeting between the Secretary of State for Business, Innovation and Skills and the Secretary of State for Communities and Local Government. There were a number of representations from my area to Ministers to ask them to think again, including from all of the north-west local authorities, the CBI, the Institute of Directors, the chambers of commerce, United Utilities, Bentley Motors, Westinghouse, Manchester university, Manchester Metropolitan university, the university of Central Lancashire, Salford university and Lancaster university, to name just a few off the top of my head.
All of those things have been ignored and I suspect that Lord Digby Jones was right when he wrote:
“Just because regional development agencies were unnecessary in the South West, the South East and the East of England doesn’t mean they weren’t both successful and needed in the Midlands and the North… Not well done Communities and Local Government Secretary Eric Pickles. Business and all the country north of Watford deserves better than this.”
Ministers must be careful not to create the impression that they are sitting in London taking casual decisions that will ruin the lives of people they have never met. We all have an obligation, particularly those in Government, to those people and I urge Ministers to think again.

Jon Trickett: I, too, welcome you to the Chair, Mr Robertson. If we listen carefully to the Minister and look at the amendment he has proposed, it is clear that the Government have made a decision to proceed irrespective of any evidence that emerges or any consultation or the views of any business group or other sector, as my hon. Friend the Member for Wigan has persuasively argued. Our amendment seeks to explore the reasons why those decisions were taken. The Bill itself would have required the Minister to produce a report that indicated his reasons and demonstrated effectiveness, efficiency and so on, and to be accountable by means of an order in both Houses. What we face today is a Government amendment that does away with all that. It simply places the abolition into the Bill with no explanation.
I listen carefully and, as I said the other day, the Minister is a reasonable man, but he occasionally does unreasonable things. He made no rational argument in his introduction for the decision he has taken. It is not a pragmatic decision; it is an ideological decision. The ideology behind it is that it would be better for the market to determine where economic activity takes place and that it would be better for the state or organs of the state to stand back and let the market run free. He should argue that ideological position, because it is clearly the position of the governing parties. It is not a position we share.
It is not good enough to say that local economic partnerships will be able to perform some of the functions of RDAs, because the difference between the partnerships and RDAs is that RDAs recognised that from time to time it was necessary to intervene in the market to secure particular economic or social objectives. The local partnerships will effectively be advocates on behalf of local interest groups and possibly wider groups too. They will speak on behalf of businesses and perhaps other institutions, such as universities. They will play an important role, but the truth is that they will have no resources.
I now understand why the Minister wants unincorporated associations in the Bill as eligible persons. He clearly has my mates in the Brown Cow in the local village in mind to run them. Perhaps business people will form partnerships and become advocates for local industry. I do not think that that is a bad thing. In fact, I think it is very good thing. We, as politicians, should hear the voice of business and all the other agencies engaged in economic activity. However, it is important to bear in mind that there will be incidents of market failure from time to time that intervene directly in the economic life of the country.
The Minister and his Back Benchers have rested their case not on their true belief in market-led economic activity, but on a critique of RDAs’ practices. I do not believe that is a completely honest argument, because underlying it is an ideological position. In truth, nobody would defend every action of every institution, whether state or private, in society. One could develop a critique of some things that RDAs did, as I would of Yorkshire Forward in my area. I am not sure that it spent enough time on coalfield areas such as mine. Perhaps it was easier to address the problems of Leeds, Sheffield and the larger cities, which are highly dynamic, than those of the coalfield areas. RDAs could have done things differently, but the truth is that if there is a critique of an organisation, the way to proceed is by first appraising it—making a rational judgment—and on that basis deciding whether it is capable of reform. That is not the Government’s approach.
The Government simply decided after a single meeting, as we heard, that RDAs have to go. No attempt has been made to argue the case that they ought to go, other than that the Government believe that some mistakes were made. No case has been made to show that they were incapable of reform. They simply have to go. The Minister may say that I am not entirely right because there is the regional growth fund. The regional growth fund is an interesting development, but it is entirely led by the private sector in that bids are made against the fund for interventions. In a way, the Government are saying that from time to time the state needs to help.
The difference, however, between the regional growth fund and the RDAs is that the RDAs were obliged to operate strategically across a whole region, not just in a single locality, and to make regional interventions according to the priorities that the RDA had established for the region. I will not say that the regional growth fund is pitifully financed but it is not adequately financed, and it is not strategic but reactive. It depends on the next phone call, letter or e-mail from a business that wants to receive some investment. For all those reasons, what the Government are putting in place underlines the ideological assumptions that they are making.
I will make a final point about the nature of strategic intervention and whether it is possible simply to leave a market to bring about economic activity. The RDAs were based on the presupposition that from time to time there will be market failure. Arguably, the economic structure of our country reflects a degree of market failure, because the truth is that in parts of the south-east of England there are concentrations—wonderful concentrations—of economic activity that can become overheated very quickly when the economy begins to upturn, to the point that the Treasury has to turn off the supply, even though areas in the north, the south-west and elsewhere in the country have hardly begun to get started. Arguably, these regional imbalances are products of market failure.
The Labour Government understood that and understood that there were underused resources—in some cases unused resources—outside the major centres, particularly in the south-east but also elsewhere. They understood that if we were to get not only a balanced society but more importantly a dynamic economy working across the whole country, it was necessary to make regional strategic interventions. That was what the RDAs were. They reflected a set of perspectives and an understanding of how our economy works that are different to the view that is expressed in these measures that the Government are introducing.

Charlie Elphicke: The hon. Gentleman makes a forceful argument about RDAs, setting out how they were designed to focus on their own areas and improve economic growth. But is it not the case that that experiment did not work, because the gap between the north and the south did not narrow? Is that not the core problem that really needs to be tackled?

Jon Trickett: Of course, it is very difficult to know precisely what happened, but there was a point coming where it was necessary to make a judgment on the work of the RDAs and to see whether they were making a contribution to remedying the regional imbalances. The argument about RDAs should have been, “Let’s have a careful review of their achievements, see what they’ve done right and what they’ve done wrong and see whether they are capable of reform”. That is not the step that this Government have taken; they have just decided simply to abolish the RDAs for a reason that I believe has been unstated. The hon. Member for Dover comes from Kent, so he will know that there are difficult imbalances within regions, even within the south-east. I am fully aware of the difficulties in parts of Kent and elsewhere, including in his own constituency.
There is a second example of market failure, which is very pertinent to this debate. We have seen a sustained collapse of banking investment, particularly in small and medium-sized enterprises, for reasons that we fully understand and that I will not debate here. That is the current situation; it is happening now and it has been happening for some time. In the absence of banking finance, there is a serious problem for real business people in the real economy now, and the RDAs were a key source of pump-priming and sometimes of finance throughout the country. It is extraordinary, is it not, that at the point that growth appears to be flatlining—it is certainly not accelerating away—and with the banks still failing to deliver on the aspirations that all parties in this Committee have, we should be pulling away one of the primary mechanisms for providing finance to the SME sector and beyond the SME sector.
In Yorkshire, for example, Yorkshire Forward provided 112 loans to businesses—loans, not grants—securing 1,400 jobs, where the banks had failed to provide the money. I have an example from my local authority area, in which the banks had agreed to fund a major development, Trinity Walk in Wakefield, which would create 1,500 jobs. The work began and the banks simply walked away, leaving a hole in the ground, leaving construction workers unemployed and leaving part of the city centre desolate, with no possible way of finding private finance. Yorkshire Forward helped the developer to find the money to bring about the completion of that scheme using regional money from Europe. That highlights a serious problem, because when the RDAs have gone there will be no clear agency to enable access to regional funds.
I was not going to speak on this subject, but it is better to get this ideological position out on the table to show that there is a disagreement across the Committee. I suggest to the Minister that it would have been better to have a pragmatic response and an evaluation—we would have supported that, and we still would—rather than simply abolishing RDAs with the risk that some of the regions will decline in the long term because of market failures that I have just described.

Nick Hurd: It has been a genuinely good debate. It is becoming increasingly interesting to witness the intellectual renaissance among the Opposition and their sources of inspiration. The blank sheet of paper is gradually being filled out. In previous sittings we have had Winston Churchill quoted back to us, and Margaret Thatcher—reluctantly—who appeared again today. Lord Heseltine has played a distinguished part in inspiring the Opposition; the Prime Minister has been quoted not once but twice; and even Liberal Democrat Voice has been quoted in recent sittings.
This debate was in large part about Labour voice, and listening to the debate it seemed to me that the argument was for the status quo, which is a problem. [Interruption.] Heads are shaking, but I have not heard any recognition of the need for reform, or any attempt to address the problem that we face. Any Administration would have faced the same pragmatic problem around sustainability of funding, because there is simply not enough money to carry on as we were. On top of that, as many Members have added, there is not enough evidence that that money was being spent in the most efficient way.
I say to the hon. Member for Wigan, who spoke very well, that this is not a casual decision. How could it be a casual decision? We are talking about a significant amount of taxpayers’ money and a significant number of people who work in these organisations. We are talking about a decision on how the Government support economic development at a time when economic development is absolutely at the top of the nation’s agenda, because we know how difficult it is at the moment and how difficult it will stay for a while. We could go into an argument about how we got into this place, but that would not be in order. It is in order for the Committee to recognise the very pragmatic point about sustainability of funding. The old model was simply not sustainable, so the decision is, in large part, pragmatic. Is there some ideology here? Yes, I think there is a division. The Labour voice was for regionalism, but the voice on the Government Benches is in favour of giving more power at a local community level and trying to seek more local solutions.

Susan Elan Jones: The Minister commented, rightly, on the powerful speech made by my hon. Friend the Member for Wigan. She made the point that all her local chambers of commerce, and the CBI, were appalled at the decision to abolish the regional development agency. One would hope that extensive consultations were made before coming to the decision to abolish RDAs. Will the Minister outline what extensive consultations he made before coming to that extreme decision?

Nick Hurd: The hon. Lady raises an important point that I was going to address in response to the suggestion that this was a casual decision. It was no such thing. The hon. Member for City of Durham, who spoke for the Opposition, made it clear that at least the Conservative party was extremely clear, and could not have been clearer in its manifesto when it went to the people, that the RDAs would be abolished in the event of a Conservative Government. I am not, as I say, the most well-informed student of the Liberal Democrat manifesto at the last general election, but I am led to believe that there was a strong commitment to reform how the Government support economic development. The decision was not taken casually. The business world and the RDAs would have been well aware of the Conservative party’s position. The arguments were extremely well-rehearsed.
The point about consultation is important. The Government’s amendment is effectively a change to process, and puts the process in relation to RDAs in a different situation to the other bodies that we are discussing. We remain very committed to the consultation requirements in the Bill, but we have had to accept they would not be appropriate in the case of the RDAs, given our commitment to abolish those bodies and the advanced status of the wind-down process. The Department has therefore reached the conclusion that, given where we are, it is not appropriate or sensible to proceed with a full consultation process on a process that has already started. What we believe is that, because we gave a very clear signal of intent through the manifesto and many organisations responded to that, adequate notice of intent has been given.

Lisa Nandy: Would the Minister at least take the opportunity to express regret about how that decision was taken and about the confusion—which I outlined in my speech—the uncertainty and the anxiety it has caused not just for the staff of the RDAs, but for the people who relied on the projects that they were funding?

Nick Hurd: I will not. The decision has been taken. As the hon. Lady has said very powerfully in previous interventions, when a decision is taken it has to be implemented as quickly, professionally and efficiently as possible. What the Opposition seem to be recommending—I am happy to stand corrected—is that there should be further delay. That seems to be a recipe for more confusion and uncertainty, not least for people working in the RDAs. I will therefore resist that temptation and say that now a decision has been taken, the business of Government is to implement it as quickly and effectively as possible so that everyone knows where they stand.
Before those interventions, I was saying that there is a clear ideological divide. There is a difference of view on policy. There is a more localist tone from the Government Benches and from the amendments. We believe LEPs have the potential to be very important and have a valuable role to play. I am disappointed by the scepticism expressed by Opposition Members. The regional growth fund has the potential to be an important intervention. I make no apology for it being market-based. It is there to support and promote the best ideas that are out there, such as the enterprise zones, the changes to tax regulation, the avoidance of tax on jobs, or the local growth White Paper. There is a massive agenda in terms of how we, as Governments, can play a role in stimulating and supporting the economy, and we have to respect that there is a difference in views.
The hon. Member for City of Durham spoke with great passion about the north-east, as I expected she would. She regretted that there were two LEPs for the north-east, and that perhaps crystallizes the divide. Does that not actually show that when the market was tested, people did not want to replicate what was there before? They wanted something different. As far as I understand it, in correspondence received by the Government, despite the large number of LEP proposals, not one has covered a geographical area similar to that of the eight RDAs. How the market responded to the question is interesting; it is very different from what has been proposed by Opposition Members.

Stephen Mosley: In the north-west, we had a similar situation, in which the Labour party tried to encourage the formation of a regional LEP. However, Manchester was first to turn around and say, “We want a local LEP.” Local authorities in Manchester put the first bid forward, which started a scramble among other areas to follow in their footsteps.

Nick Hurd: My hon. Friend has reinforced my point, which is that we should respect local views.
I close by addressing two specific points from Opposition Members. The first was about European money, which I can see is very important. It should be reasonably clear that applications for that will now be processed through the European regional development fund secretariat, which is staffed in part by former RDA employees, in the Department for Communities and Local Government.
The hon. Member for City of Durham queried why the functions were being transferred, which returns to the main argument. The Opposition have tried to make the case that this is all about centralising and renationalising, when it is actually about improving ministerial accountability and streamlining the bloated bureaucratic state.

David Wright: I want to take the Minister back to some decisions that the now Lord Heseltine made when he was Secretary of State. In the last Conservative Government, he was instrumental in setting up Government offices in the regions, which was done primarily to provide a local influence and a format to access European funds, alongside making localised decisions about resources in areas. It was a wise decision. Does the Minister accept that he is now reversing it?

Nick Hurd: I simply say that that was then and this is now. The Department has decided that applying for and processing European money is best done within the Department itself, in the interests of improved accountability, simplicity and efficiency.

Jonathan Ashworth: The Minister is being extremely generous in giving way, for which we are grateful.
Further to the Minister’s last point—forgive me if I missed something, because I have been popping in and out—how much do the Government expect to save by the abolition of the RDAs? I also draw his attention to an article by Lord Heseltine in The Times on 23 August, in which he said that it is a mistake to abolish RDAs. He wrote:
“Instead each government department has recreated its individual empire in the regions.”
Will the Minister, who is a Cabinet Office Minister, tell me whether that is the case, and if so how much is it costing?

Nick Hurd: I am not aware of empires in the regions, but I am tempted to drop a line to Lord Heseltine to inform him that he has become a pin-up of the Labour party. I can assure the Committee that he will be absolutely appalled by that news, which I shall have to break to him gently.
Serious questions were asked about what would happen to RDA land and property assets. That must be handled carefully. In addition to what I said before, I can tell the Committee that the RDA land and property assets being transferred to the Homes and Communities Agency will be managed by stewardship arrangement. The idea is that local partners, such as local authorities and local enterprise partnerships, will be invited to sit on local committees that will manage the future development of the assets. It is imagined that the stewardship arrangement will be self-funding, so profits from the sale of assets will be reinvested. Most of the assets will be sold on the open market once they have been fully developed to bring them to market value.
The hon. Member for Telford wanted to tease out of me a full cost-benefit analysis of the proposed reforms. I close by saying again that we have committed to producing an impact assessment of the reforms, which will include that analysis. I am assured that the Department will produce the impact assessment in November. On that basis, I return to the central argument relating to the amendments. The Government are committed to the consultation requirements in the Bill, but we accept that that would not be appropriate in the case of the RDAs. Delaying the closure programme would be costly and would jeopardise what we believe—there will be disagreement on this—will be a more cost-effective delivery of economic development provision.
Abolishing the RDAs is a core element of the Government’s reform of economic development. We believe that the RDAs were not based on a coherent economic geography, and that citizens did not really identify with them. Despite spending large amounts of money, they were not successful in narrowing the performance gap between the south-east and the rest of England. Lastly and most pragmatically, the RDAs’ budget was unsustainable. There is simply not enough money to continue funding them. On that basis, I support the Government amendments and oppose the Opposition’s.

Amendment 2 agreed to.

Nick Hurd: I beg to move amendment 3,in schedule 1, page19,line21, at end insert ‘Registrar of Public Lending Right.’.
The amendment seeks to abolish the office of registrar of public lending right and enable the transfer of functions of the PLR into an existing organisation. The Government recognise the importance to authors of the public lending right. Authors’ right to receive payment when their books are borrowed from public libraries is protected in law. That right will continue even if the statutory function of distributing the PLR fund to authors is transferred from the current PLR public body to another existing body, effectively abolishing PLR as a separate organisation.
Which body will take over the PLR’s role is subject to ongoing discussions, but it is our intention that PLR payments will still be administered by a body operating at arm’s length from Government and with the same independence and impartiality currently awarded to the PLR registrar. Furthermore, a cap will be placed on the costs to be incurred in administering the scheme, affording a degree of protection to the funds available for making payments to authors. The amendment therefore simply reflects the reality that there is no longer any justification for the registrar of the public lending right to exist as a separate legal entity.

Amendment 3 agreed to.

David Heath: I beg to move amendment 4,in schedule 1, page19,line23, at end insert ‘Youth Justice Board for England and Wales.’
This is the first time I have spoken under your chairmanship this afternoon, Mr Robertson.
We move on to the Youth Justice Board. Amendment 4 will reintroduce the Youth Justice Board for England and Wales into schedule 1.

Jon Trickett: Will the Minister give way?

David Heath: I am not sure I have entirely expanded my case, but of course I give way.

Jon Trickett: I am looking to get into the “Guinness Book of Records” for the fastest intervention in the west. I want to raise a point before the Minister makes his case. The Bill states that, in the Secretary of State’s view
“the provisions of the Public Bodies Bill…are compatible with the Convention rights.”
The statement refers to the Human Rights Act 1998. Whether or not we have a different view on the Human Rights Act—I suspect we do not—specific human rights are enacted for children and young people. Because this is an amendment, it is not clear whether the Secretary of State has indicated whether, in his view, the amendment is compatible with the Human Rights Act, particularly in relation to the rights of incarcerated children. I raise the point now because I intend to pursue the matter further and first want to know whether it is the Secretary of State’s view that the amendment has been properly assessed in light of the Human Rights Act.

David Heath: I can see why the hon. Gentleman wanted to make such an early intervention. I can give him an absolute assurance, because the amendment reintroduces something that was in the original Bill and that was certificated by the relevant Minister when the Bill was considered in the House of Lords.
There is no question that our proposal is not compatible with the Human Rights Act or the convention. It would be extremely difficult to find any grounds on which it could be suggested that the administration of the Youth Justice Board—by means of the apparatus on which I will in due course expand—could fall foul of the Human Rights Act or the convention, because the Youth Justice Board does not predate the convention on human rights, to which the United Kingdom has long been a signatory.

Jon Trickett: Let me draw the Minister’s attention not to the Human Rights Act itself, but to the UN convention on the rights of the child. He may seek to take further advice in due course. Article 40.3 states that signatories shall seek
“to promote the establishment of laws, procedures, authorities and institutions specifically applicable to children alleged as, accused of, or recognized as having infringed the penal law”.
I am no lawyer, as I said earlier, but the article appears to state that there should be specific provision for the treatment of children by criminal law, but the amendment seeks to abolish such specific treatment.

David Heath: I again reassure the hon. Gentleman that the amendment does nothing of the sort. There is still a clear separation in the Government’s proposal—which I hope to explain at some point—between the administration of youth justice and the administration for adult offenders. There is no question of the Government doing anything that would conflict with any of the provisions of the convention on human rights, to which I am a strong subscriber. I hope I have reassured the hon. Gentleman; it is transparent that that is not what we envisage.
If I may I shall make some progress. The proposal is to bring the Youth Justice Board for England and Wales back into schedule 1. It will enable the Government to abolish the Youth Justice Board and deliver its core functions in a more accountable and efficient way. However, germane to the point raised by the hon. Member for Hemsworth, the delivery of youth justice by youth offending teams on the front line will not be affected. We are talking about policy rather than implementation.
Hon. Members will be aware that the Youth Justice Board forms one part of the youth justice system, whose aim is to prevent offending and reoffending by children and young people under 18. They will also be aware, as we have already had a flavour, that its future is an emotive issue, which does not surprise me one bit. We had an excellent debate in another place, where noble Friends and others were able to express their concerns and views, and they passed an amendment to remove it from schedule 1. The Government listened carefully to the issues raised in that debate and have responded to them.
Let me report the importance of the Youth Justice Board and its work over recent years. It was established by the Crime and Disorder Act 1998, and there is no doubt that it has helped to transform the youth justice system. It oversaw the establishment of local youth offending teams and has fulfilled an important role in reducing offending and reoffending by young people, by spreading best practice and helping to make youth justice a priority for local authorities. It has also driven up standards in a discrete, secure estate for young people. I again emphasise that there is no suggestion that that secure estate for young people will disappear or be merged into the wider prison system.
As I have already said, the Youth Justice Board forms only one part of the youth justice system. We have listened to the concerns expressed by peers, and I hope to explain why we propose that the national governance of youth justice, not its front-line delivery, should be done differently. The reform is consistent with the Government’s principles of localism, their drive to reduce the number and cost of public bodies and their commitment to clarify lines of accountability.
I am not going to claim authorship or to be an originator of the Youth Justice Board, but it was established at arm’s length from Government to provide strategic leadership and coherence to the youth justice system, partly in response to a 1996 Audit Commission report “Misspent Youth”. I was a member of the Audit Commission at that time; I considered that report when we brought it forward, and my name is on it. I am familiar with that report, which found at that point that there was no integrated youth justice system, and that what did exist was inefficient and expensive. The Youth Justice Board’s arm’s-length status gave it freedom to establish a radical blueprint of partnership working, which is key to reducing youth offending. However, we have had a decade since then.

Susan Elan Jones: I would be most grateful if the Minister explained how the Government have listened to the concerns of the other place when they now appear to have done precisely the opposite, by proposing to abolish the body?

David Heath: I hope I will be able to explain that. We do not agree that it should simply be kept in its present form. What is important is the functionality. We have had this argument and will do so again. The key is that we deliver the purposes of these bodies in the most effective and efficient way. In doing so, we take cognisance of what was said in another place, certainly in this case, where there are people with considerable expertise on this issue to whom I pay tribute. They are people with whom I have worked on many occasions over the years on a number of issues. The Ministry of Justice has talked carefully to the protagonists of that debate to identify their concerns, to see how their concerns can be met within the proposed new structure, and to consider how to ensure that that discrete part of the Ministry of Justice that will deal with this area meets all the necessities that have been identified to continue the work of the Youth Justice Board.
We are now 10 years on and a lot has been done in that time. I openly pay tribute to the previous Government for having taken on a lot of the work that was necessary to transform the youth justice system. At one point, it was a mess. Thanks to the Youth Justice Board and the legislative and administrative work that went on within the previous Government, that context has been changed. A coherent youth justice system has now been established, which is precisely the argument. The necessity for the Youth Justice Board was to make those changes and it has done that. What we need to do now is to ensure that the integrated youth justice function is properly delivered from within Government where the impetus is no longer on reform of the system to improve it but on maintaining and continuing the improvement within Government.
One of the keys to such work is direct ministerial accountability. At the moment, there is no direct ministerial accountability; it is at one remove by an arm’s-length body. There should be a Minister who is directly responsible to this House and who will answer for the policy on what is a key part of the justice system. It should be Ministers who determine the standards required in youth custody. I have difficulties with it. I know why it was set up in the way in which it was. I was there with the genesis of the report. None the less, it is not right that unelected individuals in a non-departmental public body are responsible for spending £300 million of taxpayers’ money to purchase secure accommodation. That is not the case with the adult estate. It is hard to see why it should be the case with the juvenile estate. No such specialised body exists for securing accommodation for other vulnerable categories of offenders. That is why the Justice Secretary, in his written ministerial statement of 23 June, set out his intention to carry out the core functions of the Youth Justice Board within a newly created youth justice division. He said:
“The Youth Justice Division will continue this Government’s focus on meeting the needs of children and young people”—
which is precisely the point raised by the hon. Member for Hemsworth—
“overseeing the delivery of youth justice services, identifying and disseminating effective practice, commissioning a distinct secure estate and placing young people in custody.
The Youth Justice Division will be a dedicated part of the MoJ and will sit outside of the National Offender Management Service. It will ensure that the commissioning of the youth justice secure estate and the placement of young people in custody will continue to be driven by people who have a dedicated focus on the needs of young people. The structure will also ensure that youth justice work in the community—primarily conducted by youth offending teams—remains closely linked to work with young offenders in custody. This is at the heart of our ambitions for a ‘rehabilitation revolution’.—[Official Report, 23 June 2011; Vol. 530, c. 28W.]
That is something that is dear to me and, I suspect, to other members of the Committee. We want genuine rehabilitation and the ability to work with young offenders in the community as well as within secure accommodation.

Valerie Vaz: I would like some clarification from the Minister. He talks about a new team in the Ministry of Justice. Are new posts being created and is there new money for this? I do not know whether the Minister is aware but there are budget cuts in the Ministry of Justice.

David Heath: Let me qualify what I mean by a new team. There are some key personnel who are the same people, moving from the Youth Justice Board to the new division in the Ministry of Justice. I cannot get away from and will not hide the fact, because the hon. Lady asked a perfectly reasonable question, that there are budget cuts across the Ministry of Justice. No part of the Ministry of Justice is entirely free from the difficulties of meeting deficit reduction measures. It would simply be an untruth to say to the hon. Lady that there is no potential for budgetary reductions. Through some of the administrative savings possible because of the transfer from the separate, arm’s-length body to the Department, we certainly hope that that is mitigated in the case of youth offender management in the youth justice division. It is simply impossible, however, to completely avoid the issue.
A significant number of people who currently work within the Youth Justice Board will transfer en bloc to the Ministry of Justice to provide the key and core staffing for the youth justice division. Some 180 people in total will make that transfer, but I will go on, because there are some key people involved who ought to provide a degree of confidence to members of the Committee about the work of the new division. I have certainly gained the impression that confidence has been given to some Members of the other place who had real concerns. The new youth justice division will be a powerful impetus behind future improvement, with the policy leverage within Government to effect change. At a time when Departments have a wide range of priorities and scarce resources, it is Ministers—led by the Justice Secretary and the Minister of State with responsibility for the youth service—who are best placed to lead the youth justice system.
I said right at the beginning—I repeat it now, because it is germane to the whole argument—that the reform will not impact on the delivery of front-line youth justice by the youth offending teams. Front-line delivery is established locally and is completely separate from the national leadership and the oversight provided by the Youth Justice Board. The two should not be conflated. Under the 1998 Act—I served on what was then described as the Standing Committee on the Bill that became the Act—local authority-led youth offending teams were given responsibility for delivering youth justice. We have also established a dedicated, nationally commissioned secure estate for young people. YOTs are accountable to the chief executive of the local authority and are well embedded in local structures. They do an excellent job and will not be abolished. Young people will also continue to be placed separately to adult offenders in a dedicated secure estate that is driven by their needs.
We intend, as I said, to retain the expertise of Youth Justice Board staff. The Justice Secretary has announced that John Drew, the board’s current chief executive, has agreed to lead its transition into the new youth justice division structure and to continue to lead it beyond that. That will ensure continuity in senior management. We appreciate that the Youth Justice Board successfully brought together staff from a number of different backgrounds, including staff with direct experience of youth justice, social and health services and police and probation officers. We want to continue to harness that expertise and experience.
The Justice Secretary has also recognised the need to strengthen the Ministry’s focus on youth justice—again, this is part of the response to the criticisms that were levelled in the other place—by establishing an advisory board of experts to advise on youth justice issues and to provide expert challenge and scrutiny. Dame Sue Street, a non-executive director who brings experience and knowledge of youth justice, will be taking an active interest in youth justice within the Ministry and will have a direct route to the permanent secretary and the Secretary of State.
Other mechanisms to secure a focus on youth justice are already in place. Senior officials have established the cross-departmental youth crime and justice board, which supports the strategic agenda in this area. Regular inter-ministerial meetings ensure that ministerial representation from the Ministry of Justice, the Department for Education, the Home Office and the Department of Health supports cross-Government work on this agenda. The Government have listened and responded to the concerns of peers and interested parties. They have provided reassurances about how youth justice will be treated in the Ministry; who will lead the new division; and how it will ensure that it retains expertise within, and effective leadership of, the youth justice system.
We have also made the case for why increased ministerial accountability is required in this key policy area. A full public consultation is in progress, and Ministers will carefully consider responses before they lay draft orders before Parliament. The youth justice system needs clear and visible leadership from Ministers, supported by a governance structure that retains a dedicated focus on youth justice. That is what we have proposed. I hope that hon. Members agree that we share the same aim in reducing the harm that is caused by young people offending and reoffending. I believe that the abolition of the youth justice board and the creation of a youth justice division with direct ministerial accountability is the best way to help us to achieve this aim.

Jon Trickett: I raised this point earlier, at the beginning of the Minister’s contribution. I thought that it was curious that the Bill had been signed off as compatible with the Human Rights Act and the amendment had not, although I take the Minister’s point that it had been in the Lords.
I referred to the UN convention on the rights of the child, and the truth is that the clause that I referred to is in the convention for a reason. It is not to prevent young villains from being treated appropriately—severely, if appropriate—by the criminal justice system, but whenever the state decides to intervene in an individual's life, security has to be provided. Clearly, once one enters the criminal justice system, it is possible that the consequence will be incarceration. Certainly, there will be questioning, investigation and all the other processes, and people will be held while those processes take place. In relation to young people and children, society wants to see appropriate punishments when necessary, but also appropriate safeguards over how the state deals with such people. That has been recognised internationally by the UN convention that I have just referred to.
The convention suggests, and I think that the Minister agrees, that there should be a separation of function, particularly in relation to young people, between incarceration and the safeguarding of the rights of those young people, albeit that one accepts that if a young person is a villain, they ought to be dealt with in the appropriate way. In establishing the youth justice board as an independent body, the country decided—I believe rightly—that there should be some independent oversight of the processes that are carried out in the criminal justice system. That is the core of this discussion. The MOJ will deal with the administration of criminal procedure and the criminal justice system, including the administration of young people who are incarcerated or held while investigations take place. The Government propose to place both functions inside the MOJ. That is where we have a great difficulty with this proposal. I did not hear a case from the Minister which said that there should be a unification of the two functions—combining the safeguarding of young people with the operation of criminal justice—although he did say that there would be a separate division, presumably run by civil servants within some sort of external advisory board, that will deal with young people.
The safeguarding of young people, when they are in the hands of the criminal justice system, is currently done independently. That is the point I want to insist on as I go through my reflections. The Youth Justice Board is an executive, non-departmental body. The Minister made much of his case on the argument that where money is being spent it should be accountable to Parliament through the appropriate Minister, but the truth is that the YJB’s members are appointed by the Secretary of State for Justice and make recommendations to him on any conclusions that they arrive at. In all respects, as far as I can see, those board members are accountable to the Secretary of State, who is answerable to Parliament on how the criminal justice system operates in relation to young people. I do not therefore accept the Minister’s argument that there is a lack of democratic accountability.
The YJB does a number of things. It oversees the youth justice system in England and Wales; it works to prevent offending and reoffending by children and young people under the age of 18; and it ensures that custody for them is safe, secure and addresses the causes of their offending behaviour. That last function is the key function, and it needs to be kept separate from the civil service. The civil service and the MOJ are obliged to deal with criminal justice as it functions. To suggest that those same civil servants, even within a different division but reporting to the head of the Department, should be two-hatted is inappropriate. That they should play both the safeguarding function and the incarceration function at the same time is wrong. When we are talking about the liberty of young people, it is crucial that we have an agency that is independent and capable of exercising that function.
The YJB is made up of 11 board members and a chair. They are appointed on the basis of their knowledge and expertise on youth justice by the Secretary of State. They are a group of individuals, drawn from local government, children’s services, education and skills, health, the police, the judiciary and the voluntary sector. They go well beyond the expertise that is contained within the MOJ. A child or young person who indulges in criminal behaviour will almost certainly be known for some time to various agencies of government, both local and national, to the police, schools and so forth. It is interesting that the YJB tries to address the issue holistically, to look at all the various agencies and not just the MOJ playing that particular function in the administration of criminal justice, to try to address the wider causes of young people’s criminality. Again, it would be a blow if those skills were lost.
The YJB has an advisory role to both central and local government and all those other agencies too. It informs and advises the youth justice policy unit inside the MOJ on policy. Therefore, we know that there is already a youth justice policy unit inside the MOJ. That is not new, but the Minister wants to repatriate the function back inside the MOJ, rather than keep the independence that the declaration of rights I referred to requires.
I do not want to be disrespectful. I would like to hear the argument made more strongly than it was in the Minister’s opening comments. It is not as if the YJB lacks success or is somehow dysfunctional. In fact, he did not rest his argument at all on bad practice, bureaucracy or dysfunction. I shall tell the Committee in a minute my guess on why this is being done. It is not due to a critique of how the YJB operates. The Committee should be aware that in the lifetime of the YJB, there was a 45% reduction in first-time offenders in the particular age group it covers, though I think it would be wrong to attribute that purely to the YJB. The frequency of reoffending by young people was reduced by 27% in the same period, and the number of under-18s held in custody at any one time was reduced by more than 25%. The National Audit Office 2010 report on youth justice praised the work of the YJB.
It is hard to see an argument, first, on grounds of independence—the point I began with—or, secondly, on grounds of function and how the function is carried out. The Minister has not said, “This is a bureaucratic monstrosity.” He simply said, “I would like increasing accountability,” but there is already accountability, as I have described.
When the proposal went to the other place, it caused genuine concern and consternation. Rather than being partisan, action came from the Cross Benchers, many of whom work in the criminal justice system. Many of them are practising barristers, lawyers, judges and so on, or have been. They were very strongly of the opinion that abolition was a retrograde step. In the Minister’s opening remarks, I felt that he fudged what happened in the other place. There were two sentences without a linking sentence in between. He referred to discussions in the other place and said that the Government had listened to what had happened, but he failed to mention—perhaps deliberately because he thought he had implied it or thought that we all knew it so it did not need saying—that the House of Lords overwhelmingly rejected the proposal.
They rejected it because the job of Parliament, and perhaps particularly from time to time the job of the House of Lords, is to reflect on any threats to liberty that the state or the Executive might offer, particularly to the liberty or rights of young people. It was a serious debate. Many members from all parts of the House expressed the view that they were appalled by the Government’s suggestion. The Minister has gone away and reproduced, as he has said, the same proposal. I could not recognise in his argument any fresh proposal, ideas or suggestions on why the plan is more acceptable now than it was when it went to the other place, but something has happened, which he did not refer to, of which we must all be conscious—the events in cities over the summer.
Those events form a background, within the context of which we have to reflect on all sorts of things: the way our society operates; the nature of villainy and criminality; and how the criminal justice system works. Something that will definitely be on people’s minds is the fact that so many young people were involved in those criminal actions in the summer, and that so many of them were temporarily incarcerated. Consider the scale of what happened and how the holding cells and the prisons were filled with young people who were accused—remember, they are innocent until proved guilty—of criminal actions. That is the context in which the debate takes place, and that was not available to the House of Lords.
Many of the agencies—from the police through to the prisons, but all the other agencies too—that provide services to families, communities and people in our country clearly had knowledge of the individuals who were charged. Many of them have now been found guilty. First, we should not turn our backs on the expertise of all those agencies. That expertise is contained within the Youth Justice Board. Secondly, if the Minister had had his way already, there would have been a severe crisis, with all those young people being held in cells or put into prison. I have seen no evidence, had this function been repatriated back into the MOJ, that it could have dealt with the flood of young people who were entering the criminal justice system.
The Youth Justice Board handled the situation and is continuing to handle it. It is doing so in a wise and careful way. It is surprising that the Minister managed to speak in September about how we deal with young people in trouble with the law, yet failed to mention what can almost be described as a social spasm that took place only a few weeks ago and which we are still dealing with. It was incumbent on him to say, “These events happened and the Youth Justice Board failed or could have been improved if we had done things differently.” But he did not rest his case on that at all. Nor did the Secretary of State for Justice argue that the problem was caused by the fact that there was a Youth Justice Board. At no point did he make that case. The YJB came into its own then. There was a massive influx of young people into custody. The YJB played an important role.
The Minister may be aware of the periodical Children & Young People Now. It reports:
“The MOJ today denied that there has been a change of heart”
about the abolition of the Youth Justice Board. It continues:
“But senior youth justice figures have told CYP Now the move is now in question due to strong sector support for the organisation and fears”—
that is, stakeholders fear—
“a unit within the MoJ would not be able to cope with major incidents like the riots as well as the YJB.”
The Ministry has denied the suggestion, but it is a widely held view among stakeholders that there is now an internal debate within the Ministry about whether it makes sense, in the shadow of events that have not yet played out, to abolish the very agency that is charged with dealing with young people who may or may not be engaged in criminal activity.
I am baffled as to why we are where we are, although I am not truly baffled because the clue was given away a short time ago. The MOJ is facing the most catastrophic cuts and the Government are attempting to have two narratives, almost, about policing, crime and criminality. On the one hand, they say that they want to crack down. We heard some of the language from the Secretary of State for Justice, the Prime Ministers and others, which was very strong. Perhaps it was merited; it is not for me to say at this stage whether it was merited or not. At the same time, however, the Government are cutting the process of criminal justice for financial reasons. Those are the most shameful reasons we can imagine, because the primary duty of a Government is to protect citizens. It is extraordinary—is it not?—that a centre-right Government should be cutting such services.
There is a paucity of argument in the Minister’s case. The truth is that, shamefully, this is being done not to improve the provision of criminal justice and the protection of young people, but to save money.

Jonathan Ashworth: My constituency was one of those that suffered some disturbances; that is probably the most accurate description. They were not the riots that that we saw in other cities, sadly, but we had pockets of thuggish disturbance and disorder over the summer.
As I understand it, the Deputy Prime Minister has launched some sort of inquiry or commission to look at various factors. Would it not make sense for the Government to pause on the abolition of this body until the outcome of the Deputy Prime Minister’s inquiry?

Jon Trickett: I am very grateful to my hon. Friend, who makes a very powerful point; in fact, he steals my last couple of sentences. But I am grateful to him for making it and I am also interested to hear about the problems in Leicester, which I hope are now being resolved.
The truth is that there was a national debate in the few days after those incidents, and neither the Prime Minister nor anybody else got up and said, “Actually, the problem is the YJB.” Nobody ever made that argument. There was a debate about how to proceed. The Prime Minister gave the impression that he had already come to a view as to the causes and consequences of the disorder, but the fact is that at no stage did he say that the YJB was the problem.
After the national debate had begun, it became clear that there should be a review of what had happened. That must be a review of both the causes of the disturbances and how to deal with young miscreants. The truth is that this measure is a wrong step taken at the wrong time for absolutely the wrong reasons. I cannot see how we can possibly sit on our hands and allow it to proceed.

Lisa Nandy: I know that members of the Committee have heard quite a lot from me today, so I apologise for speaking again, but I have a particular interest in this subject and wanted to speak on it. Before I entered Parliament, I worked for many years for the Children’s Society—its chief executive, Bob Reitemeier, is a member of the Youth Justice Board—which prioritises work with children in trouble with the law at all stages of the process.
I have worked closely both with the agencies involved in delivering the system with the Youth Justice Board and, much more importantly, with the children and their families. I am deeply concerned about the move to bring the Youth Justice Board into a central governmental Department. One reason is the credibility that the Youth Justice Board has with the other agencies it works with. As my hon. Friend the Member for Hemsworth pointed out, it works with a range of agencies. I have seen for myself the difficulties inherent in working with local authorities, the courts and the police, and—this is often not recognised—with a range of Government Departments, particularly the Home Office and the Department of Education, formerly the Department for Children, Schools and Families.
The Youth Justice Board’s expertise, which partly stems from the board but also comes from the staff, gives it credibility and would be a real concern if it were lost. A point made strongly by the Youth Justice Board, with which I agree, is that its credibility with partner agencies is partly due to the fact that its staff are recruited from a wide range of backgrounds with specific expertise. It recruits directly from some of those partner agencies, which is why it is able to gain the trust and confidence of those agencies and an understanding of how they work, and why it can ensure that everybody works together. A real concern about moving the Youth Justice Board into the Ministry of Justice is that that flexibility will be lost, as will the expertise and credibility of its work and its ability to do its job.
I will not dwell too long on how well the Youth Justice Board works, because my hon. Friend the Member for Hemsworth talked about that. Reoffending is down by 27% under its watch and there has been a reduction in the numbers in custody, as well as savings made. I do not think there is any dispute about that. It is still worth emphasising the point that any change, even if some Members believe it is the right one, is disruptive. It is a cause for concern that an organisation that was and is doing such good work, and which has such a track record of success, will suffer from all of the things we discussed in earlier debates: loss of staff and expertise, along with the impact on morale.
One reason why I wanted to highlight my opposition to this change is that I have worked with many Government Departments with responsibility for children. I have worked with refugee and migrant children over the past 10 years, who, until the creation of the Department for Children, Schools and Families, were dealt with solely by the Home Office. Then, responsibility was shared across Government.
One problem is that children who end up being dealt with by any Department other than the Department of Education become invisible. I have seen that in so many different areas. If they are dealt with by the Home Office as refugee and migrant children, they are seen as migrants first and children second. If they are dealt with by the Ministry of Justice or the Home Office because they are in the criminal justice system, they are seen as criminals first and children second. One really important thing the creation of the Youth Justice Board, outside of central Government Departments, did was to lift them out and say that they are children first and foremost, and that we have a responsibility, both in law and morally, to ensure their safety and well-being.
Having worked with many of those children over several years, I know that some of them have done some terrible things. I also know that many of them are victims in their own right. We owe them a responsibility to ensure that they are safe. Children in any kind of detention or custody are among some of the most vulnerable in the country, because they have been taken from their homes and are with other children who may have significant problems.
Concern has been expressed following the recent riots about the fact that many of the young people who have gone into custody have done so for the first time. They did not have the skills and awareness to protect themselves properly in such an environment, and the Youth Justice Board has played a key role over the past few months in keeping those children and young people safe. It is a real testament to its work that we have seen no serious incidents of injury, harm or even death.
The Minister mentioned one reason why the Youth Justice Board was set up: that the co-ordination that is so crucial in this area was simply not happening when the work was carried out within government. It is important to remember that a number of Departments are involved. If, like me, any other Member present has tried to work with several Departments at once on delivering a shared objective, they will know that it is virtually impossible, given that Departments all have their own competing objectives that not only differ but sometimes conflict. I would even say that trying to get different teams within Departments to work together is hard, so delivering a shared objective when several Departments are involved is incredibly difficult. So much depends on the relative influence of the Departments and of their Secretaries of State within government. I am concerned, looking at the existing set-up, about whether the Secretary of State would have the authority to push the proposals through and ensure that children’s needs are highlighted.
A number of factors mean that an independent voice is absolutely essential. Ever since the tragic murder of James Bulger, we have seen increasing numbers of young people catapulted into custody. There was the introduction of antisocial behaviour orders, which require only a civil standard of proof in order to be granted, even though breaking the orders could result in criminal penalties. That has had a dramatic effect on the number of young people who have been pushed into a criminal justice system in which, frankly, many have learnt how to become even better criminals, and many have become much more disconnected from society.
Recently, we have seen the riots, which, as I mentioned, pushed a number of young people into custody who have never been in such an environment. There has also been the wearing down of youth services. The Select Committee on Education, which I am a member of, recently conducted an inquiry into that issue. We were overwhelmed with evidence on the virtual collapse of youth services in many parts of the country. I mention that because youth services often worked with these same groups of young people, and they had a crucial role. Without them, there is a need to ensure that, if more young people are going to end up in custody, an independent voice exists to deal with that situation.
We have seen increasingly harsh penalties being served on those who commit crimes, not only in relation to the riots but in other areas. With all such matters, it is necessary to have somebody who can step back, challenge Ministers and see the system from an independent vantage point. What often happens when Governments are faced with a crisis—whether it is riots or an immigration problem—is that there is a very fast reaction. I am not merely saying this about the current Government; it is natural that there is a knee-jerk response from Governments, and it is important to have somebody tugging in the other direction. There should be a calm, rational, expert voice, saying, “In this situation, what about children’s needs and their safety?”
Another important point is that the Youth Justice Board has a good record of innovation. I know well its decision to invite directors of children’s services into young offenders institutions to ensure that when young people were released from custody, they were released to something—not only accommodation, which was incredibly important, but a package of support. That expert co-ordination and innovation flourishes outside of a Department because of the relative expertise of board members, who, incidentally, put an awful lot of time into the Youth Justice Board. I am aware of that from my work at the Children’s Society, but it is equally true that other members put in an enormous amount of time. They are experts with tremendous networks, meaning that they can innovate because they have seen things from completely different perspectives. With the best will in the world, I do not think that will be found by moving the organisation into a central Government Department.
The Youth Justice Board can move much quicker than I have ever seen a Department move. When there is an incident such as the riots and huge numbers of young people suddenly come into custody—the sort of vulnerable young people I have been talking about— the board needs to be able to move and make decisions quickly.
I want to dwell on the question of accountability. My hon. Friend the Member for Hemsworth made several excellent points that I will not rehearse, but the point about the Youth Justice Board is that it has formal mechanisms of accountability. The members are not only appointed by the Minister, but can be removed by the Minister. That is important. The Minister sets the funding arrangements and also requires the board to report to Parliament, not to the Department. That is important because it gives Parliament a level of scrutiny that is independent and provides accountability.
Incidentally, the recent scrutiny of the Youth Justice Board, particularly by the Public Accounts Committee, has been universally in admiration of what the board has done. When it reported earlier this year, the Public Accounts Committee said that it thought that the decision to move the YJB into the Department had arisen from a policy decision, rather than from an assessment of the board’s performance. The Public Accounts Committee made the point that I also make, which is that one of the problems with such a change is that the skills, the expertise and the good work that the board does is likely to be lost in transition. I urge Ministers to take that point on board.
I have talked about the formal mechanisms of accountability, but I also know well the informal mechanisms of accountability from my work with the Youth Justice Board. In reality, Ministers consider major initiatives. It is simply not true to say that there is not such a level of dialogue and discussion and that, even if Ministers were entirely opposed to a major initiative, it would go ahead. There is a constant dialogue and sharing of views and opinions. The Public Accounts Committee said that one of its concerns is that, through not having such a free, open and honest debate and discussion, moving the Youth Justice Board into the Department could reduce accountability, rather than increasing it.
One of the factors missing from the debate, probably rightly so given that it should not be about money, is that the Youth Justice Board says that the Government’s estimate of cost savings does not stand up to scrutiny. The board estimates that it will cost £600,000 to abolish it or to move it into the Department and that the Government’s estimated savings of £250,000 a year do not take account of significantly reduced administration costs, which are reduced by a quarter. That is an important point, because it does not make sense on moral grounds, on practical terms or on cost.
My final message to Ministers is that, even if this were the right approach, and I fundamentally believe that it is wrong and will cause children harm in the long-term, this is not the right time to do it. I urge Ministers to think again.

David Heath: I am particularly grateful to the hon. Lady for her contribution to the Committee. I hope I am not patronising her, but it is excellent to have a new Member contributing to the work of the Committee with such a breadth of knowledge. She is obviously entirely sincere in what she is saying and has a degree of expertise in the area.
In passing, I pay tribute to Bob Reitemeier, too. He has done a superb job, both as leader of The Children’s Society and in his wider role. I respect him a lot. Having said all of that, on the Government’s behalf I still do not agree with the hon. Member for Wigan, but it is important to put those things on record.
I do not think there is a huge difference of opinion across the Committee on the shape of the youth justice system that we want to see: how it operates; how it innovates; and how it does all the things that we expect it to do. The crux of this argument is whether that can be done effectively by a division within the Ministry of Justice with direct ministerial involvement, which is the argument that the Ministry would put forward and which I am therefore putting forward on the behalf of the Government, or whether that can be done by the existing process using the Youth Justice Board.
I certainly hope that there has not been any suggestion on my part—it is not my intention to suggest this at any point—that the Youth Justice Board has failed in its objectives. It is quite the reverse. There is a general view that it has done its job extremely well and has been responsible for a lot of good things happening over the past decade in youth justice. That is not the point. The hon. Member for Hemsworth was trying to invite me to make the Youth Justice Board responsible for the riots, which I certainly will not do. That would be a travesty of the truth.
The question is, first, are the functions that it carries out ones that cannot be carried out within the Department? Secondly, if they are carried out within the Department, can they be done equally or more effectively by engaging with other Government Departments, which is exactly what the hon. Member for Wigan has said? My basic argument is that they could.
I am perhaps being unkind to the hon. Member for Hemsworth by asking whether he was confused about what the Youth Justice Board does, because a large part of the youth justice system is already directly administered within the Ministry of Justice. The youth justice policy unit is already responsible for setting strategic policies, including youth sentencing. The National Offender Management Service, which is an executive agency of the Ministry of Justice, is commissioned by the Youth Justice Board to provide secure accommodation for young people in young offender institutions, as well as providing some of the offender management services, such as escort and electronic monitoring attendance centres. Within the Ministry of Justice there are analytical services that have a new dedicated analytical programme on youth justice, which is shared with the youth justice board. Of course, Her Majesty’s Courts and Tribunals Service, another executive agency, operates the youth courts. There is a large element within the Ministry of Justice that is currently dealing with youth justice issues.
There is also this question about conflict of interest. On the point that the hon. Member for Hemsworth made about the UN convention on the rights of the child, if there was a conflict between the commissioning role of the Youth Justice Board and any other advice roles it had, it would exist currently. In fact, there is no conflict of interest, because the delivery of youth justice is the responsibility of local authorities. That is clear through the youth offending teams. That is the key area of delivery, and those teams will remain in place. The safeguarding of young people is done by the youth offending teams and the secure estate, not the Youth Justice Board. The YJB provides a national oversight, but that oversight can be delivered through the Ministry of Justice apparatus just as well as it can through the YJB.
I entirely agree with what the hon. Member for Wigan said about the complexities of youth justice, but that is an argument for having it within the Department. It means that the relevant Ministers, who have a function in this, can be sat around a table and talk Minister to Minister. Of course a different view can be constructed, and people can say that that independence is needed. The Youth Justice Board has expertise, which will be retained through the transfer of staff—the chief executive, John Drew, will have oversight within the Department—but it will not have a Minister of the Crown, or indeed the Lord Chancellor, in terms of seniority, who can bring other colleagues together to consider matters in the round. That is a key function.
The riots and disturbances were mentioned. Of course they are uppermost in all our thoughts, but I am not clearly convinced, as some have argued, that the Youth Justice Board did anything in response to those riots that would not and could not have been done as effectively within the Department. I would be interested to know exactly what people believe was a unique function of the Youth Justice Board. I have already said everything that I want to say about how much respect I have for the work that it has done, but I do not believe that the immediate response to the riots was necessarily or exclusively a function of the Youth Justice Board.
Incidentally, the £600,000 cost that was mentioned is simply not correct. That is the cost associated with the transition programme as a whole, and some of those costs would have been incurred irrespective of whether the Youth Justice Board was abolished. The actual costs contingent on abolition are confined to a few human resources issues associated with moving Youth Justice Board staff to the MOJ.
There are strong arguments for the move. I accept that there are sincere and genuine concerns, which have been expressed by the hon. Members for Wigan and for Hemsworth, as well as others outside this House and in another place, and which must be addressed. I can only say that the key function of the Youth Justice Board is placing children in custody, and that function is exercised concurrently with the Secretary of State at the moment. Other main functions are advisory or relate to purchase of the youth estate, and I do not believe that those things cannot be done properly within the Department under the new division proposed.
We will continue to discuss the matter. It may well be that I cannot persuade Opposition Members that this is the right way forward, but I hope that I can persuade them that the proposals are not intended in any way to diminish the work of the Youth Justice Board. Quite the reverse; they are meant to consolidate that work and take it forward in a hopefully more effective way. For that reason, I hope that the Committee will agree to reinstate the Youth Justice Board in the schedule via the amendment. The consultations on the process will continue, and the decision will eventually be taken in the light of those consultations. I hope that ultimately, we will have what everyone agrees is the right way forward for youth justice.

Question put, That the amendment be made.

The Committee divided: Ayes 11, Noes 7.

Question accordingly agreed to.

Amendment made: 5,in schedule 1, page19, leave out lines 31 to 36.—(Mr Hurd.)

Ordered, That further consideration be now adjourned. —(Stephen Crabb.)

Adjourned till Thursday 15 September at Nine o’clock.